How to get a loan when you’re on welfare

Welfare doesn’t make you ineligible for all loans. Here’s how to compare your options for borrowing money.

Welfare recipients have unexpected expenses, just like anybody else. And they may need to take out loans from time to time.

If you’re currently on welfare, you may wonder if you’ll be able to get a loan. The good news is that you can. In this guide, we explore the types of loans you may be eligible for and how you can get them.

Loan options for welfare recipients

It’s time to look for a lender that accepts your level of income and credit score. Carefully read a lender’s terms before signing anything, and be willing to walk away if the interest rate or fees are too high.

Payday loan

However, as with car title loans, watch out for high interest rates that could dig you deep into debt.

Get matched with a lender for a personal loan

Through online resources like LendingTree and Zippyloan, you can enter your personal details to get matched with a lender who fits your credit and income profile. Check with your lender to see if they accept welfare income.

Banks or credit unions

Your bank or credit union may be willing to give you a loan if you’ve been a longtime customer without any blemishes on your financial history.

Does being on welfare affect my credit?

As with any loan, you’ll have a better chance of receiving one if you have good credit. There are still loan options if you have poor credit, but the terms will not be as favorable — you will receive higher interest rates, for example.

If your credit currently is not where you want it to be, consider rebuilding it with a secured credit card.

How income affects your ability to get a loan

You won’t be barred from getting a loan just because you’re receiving welfare income. Some lenders may not accept welfare income, but many others will.

More likely, the bigger issue is that your income is limited while you’re on welfare. Lenders want to see that you have low debt relative to your income, and this may make it more difficult to get a loan. However, if you search widely enough, you should be able to find a lender that will work with your current income.

What to watch out for

You may desperately need a loan, but consider your ability to repay it. Carefully check the terms given to you by any lender before you sign an agreement. Many unscrupulous lenders target low-income individuals and welfare recipients, trapping them with expensive loan repayments.

We’ve included car title loans and payday loans in our following list of loan options. While they are options for you to consider, remember that these types of loans are notorious for sky-high interest rates. It’s not uncommon to see three-digit APRs — like 400% APR.

By contrast, the average APR for a personal loan is around 11%. Even if you have bad credit, the average APR for a personal loan is around 28%.

Also watch out for fees. Some personal loans, for example, often come with origination fees, which you pay before receiving your loan. Lenders may bury fees in the fine print. Read the loan terms in full so you’re not surprised later by unexpected payments.

Next steps

Online loan sources are great options, and we recommend pursuing those first. When you find a lender that might be right for you, take the time to understand the agreement you’ll be entering into.

Once you’re satisfied with the fees and interest rate, sign the loan terms. You should receive the loan in your bank account within one or two business days.

Frequently asked questions

Why might I not want to pursue a title loan or payday loans?

These types of loans typically come with extremely high interest rates. They offer the satisfaction of receiving money quickly, but often load borrowers with crushing repayment terms. They also tend to come with hidden rules that are terrible for borrowers. Avoid these loans, if you can.

Why is credit important when applying for a loan?

Your creditworthiness is a quick way for lenders to determine your ability to repay your loan. They use it to assess how risky it is to let you borrow money. The higher your credit score, the less lenders are willing to charge you for a loan — in other words, they’re willing to give you lower interest rates.

How do resources like LendingTree and Zippyloan make money?

These services are paid commissions for referring you to the right lenders.

What is a secured credit card?

To receive a secured credit card, you agree to put down an initial deposit, which protects the lender if you default. The amount you deposit is used as your credit limit. Secured cards are useful because you don’t have to have great credit to obtain them.

What information do I need to give when applying for a loan?

You should have your personal information ready — your phone number, email address, home address, driver’s license number and Social Security number. You’ll also need to provide bank account information and employment details.

Ask an Expert

Do not enter personal information (eg. surname, phone number, bank
details) as your question will be made public

finder.com is a financial comparison and information service, not a bank or
product provider

We cannot provide you with personal advice or recommendations

Your answer might already be waiting – check previous questions
below to see if yours has already been asked

Your Question

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and our Privacy Policy.

4 Responses

AprilJune 2, 2017

If approved for a loan and you receive welfare but have only that card account how do u receive loan without an actual bank account?

Typically, You should receive the loan in your bank account within one or two business days. If you don’t have an actual bank account it would be nice to coordinate with the lender directly to check the available options for you.

Disclaimer - We endeavor to ensure that the information on this site is current and accurate but you should confirm any information with the product or service provider and read the information they can provide. If you are unsure you should get independent advice before you apply for any product or commit to any plan.

finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, we may receive compensation from our partners for featured placement of their products or services. We may also receive compensation if you click on certain links posted on our site.

Important Information

finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, we may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.